Property taxes: the battle for hearts and minds

If Mayor Nutter wants a happy ending to his effort to transform Philadelphia's property tax system, he should do a better job of selling it. Or to be more precise, the people running it should.

A couple of weeks ago, the city sent out a half a million new property assessments to homeowners and businesses, a bold step in his Actual Value Initiative (If this issue is new to you, turn to my colleague Holly Otterbein's Taxipedia blog to learn more).

The city says a sampling shows its new assessments are pretty good, on average within 14 percent of actual sale prices for the past five years. But stories are popping up here and there about assessments that seem out of whack.

Then Friday, AxisPhilly, a non-profit journalism shop, published an online story saying when it checked the city's new assessments against actual home sales data for the last two years, they didn't fare so well.

Their analysis showed that about 40 percent of the assessments were more than 20 percent off from sale prices, and in about one out of seven properties, the assessments were more than 50 percent above sales prices.

What really bothered me about the AxisPhilly article was this: Asked to respond, a spokesman for the city's Office of Property Assessment said, "In order to validate this analysis, we would need to further study and analyze it, and right now we don't have the time to do that."

They should find the time.

A plan to go to full value assessment a few years back collapsed because enough questions were raised about the credibility of the assessments that Council simply refused to go along with it. I don't sense many Council members are ready to revolt now, but we're early in this game and I think Team Nutter is ill-advised to let these criticisms go unanswered.

I find the time

A few days after the AxisPhilly piece, I decided to try to get to the bottom of it by talking to both sides.

It's complicated, and I won't burden you with all the details. The city and AxisPhilly used different methodologies and measured different things, so the city's 14 percent figure and AxisPhilly's 40 percent aren't really comparable.

But what struck me is that while the city's Office of Property Assessment got two top officials, Chief Assessor Richie McKeithen and Assistant Administrator Marisa Waxman, on the phone with me, they still hadn't talked to AxisPhilly and had no plans to do so. McKeithen said he didn't want to get into "a back and forth" with AxisPhilly. He did note that the city's analysis used more sales data – five years as opposed to just two for AxisPhilly – and that the city had adjusted older sales to account for changes in the market.

AxisPhilly chief Neil Budde acknowledged that his team hadn't done those adjustments and that it might make a difference if they had. He said his team undertook the analysis because media reports and public statements presented anecdotal evidence of problems with the assessments, and they wanted to get some sense of the scale of the discrepancies.The analysis showed there were a lot, Budde said, but added that there might be explanations for many of them.

Kevin Gillen, a Fels Institute economist who's worked for years with property tax data (and who has consulted with the city on AVI), was generally skeptical that the AxisPhilly data had been screened carefully enough to get meaningful results.

I'm not sure where that leaves us, but my point is that Council members and others following these issues notice when city officials say they don't have the time to respond to a critical analysis.

Like I said, find the time

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A report from AxisPhilly found about 40 percent of Philadelphia's property assessments were more than 20 percent off from sale prices. A sampling is seen here. (Image/AxisPhilly)

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